Competing to Increase Bets, Multiple Banks Accelerate the Evolution of the Wealth Management Role

In different banking tiers, the wave of organizational upgrades in wealth management is continuing.

From late 2025 into early 2026, Bank of Communications, Shanghai Pudong Development Bank, and Qingdao Rural Commercial Bank have successively announced efforts to strengthen their wealth management businesses, including establishing primary wealth management departments at the head office, separating wealth management from “Wealth Management and Private Banking” operations, and planning to form dedicated wealth management teams at the head office level.

These developments did not happen suddenly. In early 2025, Postal Savings Bank of China was the first among the six major state-owned banks to establish a primary wealth management department at the head office. According to research by the New Financial Research Center of Southern Weekend, so far, 17 A-share listed banks have set up wealth management departments at the head office level (departments with “wealth” in their names), accounting for over 40%. Among the 25 banks without such departments, four have established private banking divisions.

Unlike the “on-balance sheet” nature of deposit and loan businesses, wealth management primarily profits through intermediary services such as distribution and custody. It is considered an “off-balance sheet” activity for commercial banks, and with the advantage of not occupying core capital, it has become widely recognized as the industry’s second growth curve.

Why are banks upgrading their organizational structures to emphasize wealth management? The New Financial Research Center of Southern Weekend conducted specialized research and multi-dimensional interviews on this topic. Lin Yingqi, Deputy General Manager of the Research Department at CICC and an analyst of banking industry, believes that limited growth in interest income and the stabilization and rebound of fee income from wealth management are two main reasons for some banks to adjust their organizational structures. These initiatives mark the elevation of wealth management from retail branches to a mainstream core growth driver for commercial banks.

Nie Junfeng, Chairman of Jinghua Shijia Family Office and a pioneer and deep observer in private banking and wealth management, states that digitalization and platformization are two key factors in the development of bank wealth management. They are also crucial tools for small and medium-sized banks to catch up with industry leaders amid increasing industry segmentation.

Having participated deeply in the establishment of private banking at Bank of China and CITIC Bank, and having served as head of private banking at Beijing Bank, Nie’s career trajectory reflects the evolution of domestic bank wealth management from basic financial products to high-end family wealth transfer.

Track Upgrades

Whether establishing new departments at the head office or separating businesses from existing units, the result points to an upgrade of the track.

Research by the New Financial Research Center of Southern Weekend shows that after the establishment of the new wealth management department at Bank of Communications, related businesses previously scattered across the Personal Finance Department and branch-level retail lines will be consolidated under the new department (the head office-level department is the highest internal business unit, equivalent in status to branches and holding subsidiaries). It will work closely with the Personal Finance and Private Banking departments to form the three main segments of retail business.

The path at Postal Savings Bank of China is somewhat different but yields similar results. Since establishing a private banking division in 2011, it was renamed in 2024 as the Wealth Management and Private Banking Department. The recent separation of the wealth management division is seen as a move toward more refined management of the two lines, aligning with the retail business model of “excellence through diligence” and “high input, high output.”

Research by the New Financial Research Center also notes that in 2025, several key retail indicators at Pudong Development Bank showed significant growth: retail AUM (assets under management) grew over 20% year-on-year in mid-2025, ranking first among 42 A-share listed banks; during the same period, net profit growth of its wealth management subsidiaries exceeded 70%, leading among peers.

As a leading bank in the rural and urban commercial bank sector, Qingdao Rural Commercial Bank has also taken steps in this area. In a survey, the bank stated that wealth management has gradually become a core engine and strategic pillar for revenue growth, and plans to establish a dedicated wealth management department. The bank has already formulated relevant plans to set up a wealth management team at the head office to assist branches in providing comprehensive services to private banking clients across the bank.

Compared to state-owned and joint-stock banks with more advanced wealth management businesses, rural commercial banks are more limited by their scope of operations and customer quality, showing a clear “adapt to local conditions” characteristic. The survey found that currently, 17 banks listed on the A-share market have established wealth management departments, accounting for over 40%. The majority are joint-stock banks (9), followed by city commercial banks (4). Only two rural commercial banks—Shanghai Rural Commercial Bank and Chongqing Rural Commercial Bank—are in this category, located in economically developed regions.

While only Bank of Communications and Postal Savings Bank have established dedicated wealth management departments, ICBC, CCB, and ABC each have private banking divisions, and Bank of China’s related activities are still integrated within its Digital Personal Finance Department.

Margin Compression and Fee Recovery

From a macro perspective, banks are ramping up wealth management as part of strategic transformation; on a micro level, the stagnation of net interest margins and the gradual recovery of fee income are more tangible reasons.

Research by the New Financial Research Center shows that from 2021 to 2025, over 20 quarters, the net interest margin (NIM) that determines commercial banks’ interest income has shown a clear downward trend: it first fell below 2% in Q1 2022 and remained at 1.42% from Q2 to Q4 2025, with no signs of rebound.

In stark contrast, fee income from wealth management is “turning positive” again. The research found that four joint-stock banks, led by China Merchants Bank, saw their wealth management fee income turn positive in mid-2025, with China Merchants Bank achieving its first positive growth in three years. As a benchmark in retail and wealth management, this indicates industry-wide signs of fee income recovery.

Recent data shows that in Q3 2025, fee income from wealth management at China Merchants Bank and Ping An Bank continued to grow, with year-on-year increases of 22% and 32%, respectively.

Lin Yingqi also believes that banks’ increased focus on wealth management is a confident response to the dual trends of “margin compression” and “fee recovery.” Compared to traditional lending and deposit businesses, wealth management offers advantages such as lighter capital requirements and stable cash flow, making it a necessary transformation at this stage.

Nie Junfeng states that banks’ emphasis on wealth management is not a temporary measure but a key strategic layout for building core competitiveness over the next decade. With extensive branch networks and large customer bases, banks have inherent advantages in this area. Transforming channel advantages into asset allocation capabilities is the essence of wealth management, enabling banks to upgrade from “fund intermediaries” to “wealth stewards.”

According to the State Administration of Financial Supervision and Regulation, by Q4 2025, non-interest income accounted for about 22% of total revenue for commercial banks. This means that, in the current overall revenue structure, interest income (based on deposits and loans) and non-interest income (including intermediary services and financial market investment returns) are roughly in an 8:2 ratio. Compared to international benchmarks where wealth management income accounts for 20-40% of revenue, domestic banks still have significant room for growth.

The rapidly expanding asset management industry also offers opportunities for bank wealth management. A report published by CITIC Financial Holdings in February 2026 states that by the end of 2025, China’s total asset management industry reached 184 trillion yuan, a 13% increase year-on-year. In terms of segments, public funds, insurance funds, and bank wealth management products are leading, accounting for 20.44%, 20.3%, and 18.04%, respectively. Additionally, trust assets with asset segregation functions account for over 17%. The diverse product shelf, with varying risk levels and functions, also facilitates banks and wealth management subsidiaries to expand their product and service offerings through distribution or outsourcing.

Digitalization and Platformization

Looking at the current state of domestic commercial banks in wealth management, clear differentiation and tiered development are evident. This is related to the initial need for substantial personnel investment and the high requirements for regional and customer quality.

According to the ranking of the “2025 Golden Benchmark—Wealth Management List” by Southern Weekend (see “Your Wealth Management Bank: The Expansion of ‘Special Forces’ and the Lagging Ones”), none of the top ten banks are rural commercial banks. The distribution among state-owned banks, joint-stock banks, and city commercial banks is 4:4:2, all of which are strong players within their respective groups. A rural commercial bank in eastern coastal cities previously told Southern Weekend’s New Financial Center that regional restrictions limit their scope, and economic indicators like regional GDP and per capita disposable income heavily influence their wealth management business. “If ordinary customer wealth management is this challenging, private banking with asset thresholds above 6 million yuan is even more so.”

In mid-2025, data disclosed shows that the “private banking AUM YoY growth” and “private banking customer growth” of listed banks in the A+H share markets both exceeded 14%, far above the average growth of retail AUM and retail customer numbers during the same period. This indicates that competition within the retail system for private banking is more intense, posing a significant challenge for smaller banks lacking geographical advantages.

How to solve this?

Nie Junfeng believes that digitalization and platformization are not only industry trends but also essential tools for small and medium-sized banks to catch up with industry leaders. He explains that applying digital technology in wealth management is not simply about moving offline processes online but about building a “human-machine collaborative” service ecosystem: using AI and big data for precise customer insights and targeting, freeing investment advisors from product sales to focus on high-value advisory services; platformization should focus on integrating internal and external resources (including funds, insurance, trust products, law firms, tax agencies, etc.) around customer needs to create an open wealth management platform.

Lin Yingqi states that building wealth management platforms and advancing digitalization are long-term, certain trends for commercial banks. Traditional offline services are limited, costly, and lack standardization; digitalization enables precise customer segmentation and significantly reduces costs while expanding scale.

Research by the Southern Weekend New Financial Center found that among the 17 banks with established wealth management departments, Bank of China and Beijing Bank’s departments are named slightly differently, both called “Wealth Platform Department.” Several banks, including CCB, ICBC, Pudong Development Bank, and Minsheng Bank, frequently mention “wealth management (open) platform” in their financial reports. This indicates that, in practice, promoting platform-based wealth management has become a consensus among many mainstream banks.

Should wealth management and private banking be merged or kept separate?

Lin Yingqi believes that, from the perspective of professional management and customer segmentation, establishing separate departments is preferable. Wealth management targets the general and middle-class customers, focusing on standardized products, inclusive services, and scale effects; private banking serves high-net-worth and ultra-high-net-worth clients, emphasizing customized portfolios, family trusts, cross-border and non-financial services. The customer bases, needs, capabilities, and evaluation systems differ significantly. Separating these two allows for specialized division of labor, improving service precision and operational efficiency, aligning with high-quality development of wealth management.

Nie Junfeng shares a similar view. He states that the history of Chinese banks’ handling of wealth management and private banking over nearly two decades has been a process of trial and error. Whether private banking should follow a large retail route or stick to a business unit system remains a subject of ongoing debate. Given the fundamental differences in service logic and resource investment, separate departments are more rational: merging them risks resource misallocation—standardized processes diluting high-end needs, and mass customers lacking proper support.

Research by Southern Weekend, with interns Liu Xinyu and Xu Juanjuan, concludes.